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HSBC has launched what it claims is the lowest ever five-year fixed rate mortgage, for borrowers with a 40 per cent deposit.

The deal has a rate of 2.99 per cent, fixed for 5 years. HSBC is also offering its lowest ever seven year fixed rate mortgage at 3.99 per cent. Both products have a £1,499 booking fee.

Peter Dockar, head of mortgages at HSBC, said “Every borrower has different needs from their mortgage. We recognise that many are looking for certainty with their mortgage payments over the longer term and have launched these products to meet that demand.

“This is the lowest ever five year fixed rate to come to the market and with the security of our retail deposit funding we are committed to offering competitive rates to benefit our customers with what is for many, their largest monthly commitment.”

Michael Ossei, personal finance expert at uSwitch.com, added that although the deals are “great news” for homeowners looking for security and protection against future rate rises, first-time buyers may struggle to meet the criteria.

He said: “People have to understand that with long term fixed deals there has to be a trade-off – a low rate against higher arrangement fees. And this rate won’t be available to all – in fact with a 60 per cent LTV and with a pretty hefty arrangement fee of £1,499, this mortgage could still be out of reach for many.

“First time buyers especially may struggle. But with such a low rate, and the ability to fix for five or even seven years, we may see a sharp fall in people choosing a tracker mortgage.

“But hopefully this move will kick-off the battle to win new customers, which could see further lower rate mortgages be launched, giving those looking for security more choice. Increased competition in this part of the mortgage market could also lead to a further fall in the fees and rates for longer term fixed mortgages, meaning that those who want to budget and prepare themselves for an increase in rates won’t be too heavily penalised.”